According to The Communist Manifesto, written in 1848 by Karl Marx and Friedrich Engels, the history of mankind can be examined as an endless fight between the oppressors and the oppressed (Richards 11). The same source states that originally, society was a primitive communism, that did not involve personal property. Eventually, with the extension of slavery, which transformed into feudalism and later capitalism, the pristine regime of communism was overthrown. In contemporary societies, it is proclaimed that the bourgeoises only pursue their financial interests by setting minimal salaries to the workers, while exploiting them; thus, their businesses grow. This process creates a small number of big enterprise owners and a lot of underpaid workers, that are believed to rebel, inevitably. Thus, the power will finally go to the people, although, in reality, communism is unattainable without the stage of socialism, which still implies the presence of a big state apparatus.
Advantages and Disadvantages of Communism
The main reason why communism might seem appealing is its promise of social equality. Communism theory might be considered to be utopia since it aims to create “heaven on earth”, and make the whole world belong to everyone (Richards 26). Therefore, as is typical for utopia, it obtains only positive qualities and is nothing but everyone’s dream, just like in a popular John Lennon song called “Imagine” (Richards 20).
On the contrary, the key downside of communism is its practical realization, as instead of the people state, it often represents a state ruled by a tyrannical leader, such as Stalin or Mao (Richards 18). Then, the communism concept is based on the elimination of private property, allegedly, to get rid of social inequality. That inevitably causes reduced motivation among the workers, as the most indolent of them tend to take advantage of those, who work harder, as it happened in the Plymouth Colony (Richards 24). Additionally, the property in communism does not belong to anybody, but the government, and it has to take it from its owners by force. Often, this process involves cruelty and even human sacrifices, as it happened in the USSR during dekulakization (Richards 17). Finally, communist ideological leaders are mostly focused on creating the perfect man, instead of coping with the real one (Richards 26), which is idealist and not applicable in practice.
Concepts of “the Free” in Capitalism
Definitions of “the Free” in Capitalism
When describing a free market, Richards mentions that it is “not a free-for-all” (63), otherwise, it will become anarchy, where only the strongest survive. The free market is based on the principle of consensual exchange from both sides. However, there is still a place for an unfair game in a free market, as the world and people in it tend to be dishonest sometimes. For that matter, a free market is still regulated by laws, that forbid stealing from someone or enforcing them to make a deal. The government is responsible for restraining the market from falling into chaos, but at the same time should not hyper-manage it.
Nonetheless, the main tool, that enables the smooth operation of a free market is its “invisible hand”, the definition of which was introduced by the pioneer of contemporary economics, Adam Smith. This hypothetic hand is supposed to guide the actions of people engaged in the trade; thus, it will result in the efficient distribution of goods and services. Basically “the invisible hand” helps the businessmen to balance following their selfish interests with offering a product that people will voluntarily buy.
Consequently, the definition of a free market is closely associated with the definition of a free economy. The primary trait of a free economy is its reliance on the free will of all parties involved. In its circumstances, the seller, who is, first and foremost, driven by their greed, has to find a win-win solution, while offering their product to the buyer, who looks for the best value for their money. Finding a middle ground between both parties of the exchange is what makes a free economy work.
At the same time, “the invisible hand” of a free market would not be able to function if not for entrepreneurs, since they are the ones who create value. Free enterprises are accountable not only for creating products to satisfy the ever-growing needs of the consumers, but also for producing new markets, and even new needs to meet (Richards 132). However, to do so, enterprises require a free society to exist and create. The government must not interfere in the actions of entrepreneurs and consumers, while they are the ones in control of the market. The main features of a free enterprise are private property, market competition, specialization, a price system, and voluntary exchange.
Essential Attributes of a Free Market
The existence of a free market is impossible without several essential factors. The first one of them is private property, which includes not only physical things but also labor, time, and ideas. Thus, the government must ensure the security of private property by introducing laws regarding theft, fraud, kidnapping, and slavery (Richards 71). That correlates to the second important attribute of a free market: state control of it, lawful, but still limited. Last, but not least, a free market strongly depends on supply and demand, which regulate the production and labor and represent the third and fourth vital factors of the free market, accordingly. The supply creates demand, and vice versa, while entrepreneurs sell goods or services for the highest price buyers agree to pay, and simultaneously, reward their workers with the highest wage they agree to give.
Comparison of Communism/Socialism to Capitalism
As for the differences between communism and capitalism, the most outstanding one is the discrepancy in the approaches toward humans. Communism is pursuing the vision of the ideal man, while capitalism accepts the real man with all of their flaws and imperfections. Thus, communism tries to change humans to its otherworldly standards, and capitalism uses already existing human traits for the benefit of the whole society (Richards 123).
In terms of practical use, since communism is more of a concept than a reality, it will be more honest to compare capitalism with its existing analog: socialism. This economic system implies a fully state-controlled economy. Therefore, it becomes the duty of the government to decide what goods and services to produce and how much money to ask for them. However, it is not an easy task, as even a small mistake in calculations might lead to the emergence of a surplus in one field and a shortage in another. Furthermore, the predictions of the customer demand, that are used for a planned economy can be false. At the same time, capitalism allows customers to decide what to buy and whether to buy at all. The supply of goods in capitalism is connected with customer demand, and the prices are managed by an “invisible hand” of a free market, which makes them affordable for the buyers and satisfying for the entrepreneurs as well.
Richards, Jay W. Money, Greed and God: Why Capitalism is the Solution an Not the Problem. HarperCollins, 2010.